Deal close for Indian reactor imports

26 January 2015

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India and America are close to a deal that would resolve liability issues and enable the long-awaited import of US-built reactors. Other nations, too, stand to benefit from India's plan to import up to 26 large nuclear reactors.

Meetings between US President Barack Obama and Indian Prime Minister Narendra Modi have seen a re-affirmation of the nations' friendship as well as agreements on energy, climate change and other global issues. The pair made a joint address yesterday to laud their forthcoming trade in nuclear power plants.

Two GE-Hitachi ESBWR units and two Westinghouse AP1000 units are planned for India as part of a new-build program intended to see its nuclear power reach 14,600 MWe of generating capacity by 2020 and supply 25% of electricity by 2050.

These US-designed reactors were pencilled in after the landmark 2009 cooperation agreement between the countries, but were put on hold when India subsequently brought in an unusual liability regime. In most countries, liability for a nuclear accident is chanelled exclusively to the operator who takes responsibility for the safe construction and operation of their power plant, but Indian legislation written in 2010 could see part of this channelled to the supplier under certain circumstances.

This condition was unacceptable to reactor vendors, stalling the sales and leading India and the USA to convene a Contact Group in September last year to reach a workable agreement. Modi said, "In the course of the past four months, we have worked with a sense of purpose to move it forward. I am pleased that six years after we signed our bilateral agreement, we are moving towards commercial cooperation, consistent with our law, our international legal obligations, and technical and commercial viability."

In a joint statement yesterday, Modi and Obama said: "Noting that the Contact Group... has met three times in December and January, the Leaders welcomed the understandings reached on the issues of civil nuclear liability and administrative arrangements for civil nuclear cooperation, and looked forward to US-built nuclear reactors contributing to India's energy security at the earliest."

It is understood that the solution to the liability issue is the creation of a $250 million insurance pool. Such pools are used in most countries by nuclear power plant operators to cover their accident liability to a certain level, while sovereign responsibility and international agreements cover remaining costs. In India, a pool could be used by the suppliers to mitigate the extraordinary clauses of India's liability law.

As well as liability, the Contact Group has been discussing nuclear build topics including administration, technical issues, and licensing to facilitate the establishment of nuclear parks which could feature up to eight reactors each.

Full import program

Two GE-Hitachi ESBWR units are slated for Kovvada in Andhra Pradesh, with another four proposed, while two Westinghouse AP1000 units are planned for Mithi Virdi in Gujurat, with a further four proposed.

In addition to these US reactor imports, India is also negotiating with France for the first two of potentially four Areva EPR units at Jaitapur.

India has already imported two Russian VVER units at Kudankulam and contracted for two more, while planning another two. Another six-unit power plant using Russian Gidropress technology is proposed but the site has yet to be confirmed. These imports from Russia take place under a pre-existing bilateral agreement.

The above imports come in addition to a new-build program of 16 indigenously designed reactors and 21 operating Indian units (including Kudankulam 1).